The IRS provides two options to a taxpayer, allowing them to claim deductions on their yearly taxes. A taxpayer can claim the actual expenses that qualify for deductions, which is referred to as Itemizing or Itemized Deductions. Alternatively, a taxpayer can go the simple route and claim a set standard amount that the IRS pre-determines for a given year. This option is referred to as Standard Deduction. A taxpayer has the liberty to choose either of the two options available. However, to save on taxes, a taxpayer is encouraged and advised to go with the option that gives him or her more in the deduction amount (total). Below are some of the factors you will need to consider when determining which route is best for your case.
Standard Deduction for 2011
The standard deduction will vary, depending on one’s filing status. In 2011, standard deduction for single filers and married filers who file separately is $5,800 whereas the standard of married filers who file jointly is $11,600. Head of Households filers’ deduction is $8,500 and qualifying widows and widowers has been set at $11,600. Thus, to determine the option that will be best for you, you may compare your itemized adjusted deductions against these standard figure amount to see which may be greater.
How to File in Itemized Deductions
If you choose to itemize your tax deductions, you must use the Schedule A on your 1040 to itemize. Those choosing to standardize their deductions could file using any of the following IRS forms: 1040, 1040A, or 1040EZ.
Qualifying Expenses for Deductions
The tax law lists expenses that qualify for itemized deductions. Some of these will require more specific research and guidelines to follow. You may need to consult with a tax professional in order to get further details about these qualifications that apply to each deductible expense. Some of the deductible expenses include contributions to charities, qualifying work related expenses, mortgage interest, casualty loss, state and local taxes, disaster losses, and mileage towards business or medical expenses.
Your filing status may limit your ability to choose between the two routes of claiming deductions. If you are married filing separately, you will have to go with the same option in claiming deductions; if one spouse chooses to itemize, the other spouse will also have to itemize; he or she cannot the standardizes route.
Excluded from Standard Deduction Option
The option to go with the standard deduction may not be available for some groups of taxpayers. If you are filing in a different interval than the standard 12 months, you have no other choice than to itemize. Other groups of people who cannot opt for the standard deduction include non-resident aliens or dual-status aliens.